Section 78 The Indian Contract Act, 1872
Section 78 of the Indian Contract Act, 1872 is a provision that relates to payment by an interested party.
📜 Bare Text of Section 78:
"Where a third person has an interest in the payment of money which another is bound by law to pay, and he pays it, he is entitled to be reimbursed by the other."
🔍 Explanation:
This section covers a situation where:
A person pays money on behalf of another,
Not as a volunteer, but because they have some legal or personal interest in making sure the money is paid,
Then, the person who paid has the legal right to be reimbursed by the person who was actually liable to pay.
✅ Essential Elements:
The payer must have an interest in the payment being made.
The actual liability to pay must be on another person.
The payment must be made to discharge that liability.
The payment must be lawful and not voluntary (i.e., not a gift or donation).
📌 Illustration:
A holds a lease of a factory, and B is the actual tenant responsible for paying property tax.
The municipal authority demands tax payment from A to avoid seizure of property.
A pays the amount to protect his interest.
✅ A can recover the amount from B under Section 78.
⚖️ Related Principle:
This section is an application of the principle of indemnity — where someone pays off a liability due to another’s obligation, they should not suffer a loss.
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